Common Scams That Fraudsters Use Against Businesses and How to Protect Against Them

In an increasingly digital world, businesses of all sizes are prime targets for fraudsters employing a variety of sophisticated scams. Understanding these scams and knowing how to protect your business against them is crucial for maintaining security and trust. Here are some of the most common scams aimed at businesses today and effective strategies to guard against them.

1. Phishing Scams

Overview
Phishing scams involve fraudulent emails or messages designed to trick employees into revealing sensitive information, such as login credentials or financial data. These emails often appear to be from legitimate sources, making them particularly dangerous.

Protection Strategies

• Employee Training: Regularly educate employees on how to recognize phishing attempts. Look for signs like unusual email addresses, misspellings, and urgent requests for personal information.
• Email Filtering: Implement advanced email filtering solutions to detect and block phishing emails before they reach employees’ inboxes.
• Two-Factor Authentication (2FA): Require 2FA for accessing sensitive systems to add an extra layer of security.

2. Business Email Compromise (BEC)

Overview
BEC scams occur when fraudsters impersonate company executives or vendors to trick employees into transferring funds or sharing confidential information. These scams often target finance departments.

Protection Strategies

• Verification Protocols: Establish strict protocols for verifying any requests for wire transfers or sensitive information. This can include phone verification or secondary approval processes.
• Email Security Solutions: Utilize email security tools that can detect and alert you to suspicious activity, such as sudden changes in email behavior.
• Awareness Training: Train employees to recognize the signs of BEC scams, such as unusual requests from executives or vendors.

3. Fake Invoices

Overview
Scammers often send fake invoices for goods or services that were never ordered or received, hoping that busy accounts payable departments will process the payment without verifying its legitimacy.

Protection Strategies

• Invoice Verification: Implement a verification process for all invoices, including cross-checking with purchase orders and vendor contracts.
• Vendor Management: Maintain a list of approved vendors and require thorough vetting of new vendors.
• Regular Audits:  Conduct regular audits of accounts payable to detect and prevent fraudulent payments.

4. Tech Support Scams

Overview
In tech support scams, fraudsters pose as legitimate IT service providers and claim that urgent action is needed to fix a non-existent problem. They aim to gain remote access to your systems or install malware.

Protection Strategies

• Internal IT Policies: Clearly communicate that employees should never grant remote access to unsolicited tech support calls or emails.
• Security Software: Use reputable security software to detect and block malware and other threats.
• Incident Reporting: Establish a clear process for reporting and responding to suspicious tech support interactions.

5. CEO Fraud

Overview
CEO fraud involves cybercriminals impersonating the company CEO or another high-ranking executive to authorize fraudulent financial transactions. These scams rely on social engineering to convince employees to comply.

Protection Strategies

• Strict Approval Processes: Require multiple levels of approval for significant financial transactions, particularly those requested by executives.
• Direct Communication: Encourage employees to directly confirm any unusual requests with the purported executive through a different communication channel.
• Role-Based Access Control: Limit the number of employees who have the authority to initiate or approve financial transactions.

6. Overpayment Scams

Overview
In overpayment scams, fraudsters send a counterfeit check for more than the amount owed and ask for the excess to be refunded via wire transfer before the check bounces.

Protection Strategies

• Check Verification: Always verify the legitimacy of checks before processing any refunds.
• Payment Policies: Set clear policies for handling overpayments and require a waiting period before issuing refunds for check payments.
• Bank Alerts: Work with your bank to set up alerts for unusual transactions that could indicate fraudulent activity.

Conclusion
Staying vigilant and proactive is key to protecting your business from the numerous scams that fraudsters employ. By understanding common scams such as phishing, business email compromise, fake invoices, tech support scams, CEO fraud, and overpayment scams, you can implement effective strategies to safeguard your company. Regular employee training, robust verification processes, advanced security solutions, and clear communication protocols are essential components of a comprehensive security strategy. Taking these steps today will help protect your business from financial loss and reputational damage, ensuring a secure and trustworthy operation.

From a banking perspective, there are several solutions and tools to help mitigate and prevent fraud. Reach out to the Business Banking Team to learn more about how Fidelity Bank can help.